Pitti Laminations Limited
Q1 FY2015 Earnings Presentation August 11, 2014
Engineering Solutions
Cautionary Statement 2
This presentation contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Pitti Laminations’ future business developments and economic performance. While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Pitti Laminations undertakes no obligation to publicly revise any forward looking statements to reflect future / likely events or circumstances.
Investment Highlights 3
o Larger and more sophisticated laminations with size in excess of 750 mm in diameter
o De-risked business by product diversification: Added castings as a new product
o Diversified customer base from motor and alternator to mining, oil & gas and infra sectors
o Balanced exports and domestic orders
Business Initiatives
o FY2010-14 revenue CAGR of 13%
o 5 year average EBITDA margin of ~14%
o Dividend payout of 32% in FY2014 with dividend yield of 2%
o Long term contracts with built in material price variation clause
Financial Performance
o Supplier of choice: One of the few globally vertically integrated companies with tooling, lamination, casting and machining facilities
o First commercial manufacturer of laminations in India certified by BVQI of UK for ISO 9002
o Has 2 world class manufacturing facilities in Hyderabad, India
o India’s only indigenously developed tool room with a portfolio of over 3,400 tools
Best-in Class Operations
o India's only end-to-end product and service provider in the electrical lamination segment
o Market leader in the special purpose motors segment in India
o Pioneer for the manufacture of traction motor subassemblies in India
o One of the few suppliers in the world with tooling, laminations, casting and machining under one roof
o Long term customer relationships: Crompton Greaves (20 yrs), Siemens (15 yrs), GE (10 yrs)
Market Positioning
Performance Highlights 4
o Total Volume 4,884 MT, an increase of 30.6%
Domestic volume of 3,400 MT, an increase of 38.6%
Export volume of 1,484 MT, an increase of 15.3%
o Net Revenue of Rs. 720 million, up 12.8%
o EBITDA of Rs. 70 million with margin of 9.7%
EBITDA was impacted by lower stator frames sales due to temporary postponement of orders
o Total Debt reduced to Rs. 1,011 million compared to Rs. 1,152 million as of 31st March 2014
Debt /Equity ratio of 0.90x compared to 1.03x in Q4 FY2014
Commenting on the results, Mr. Akshay S Pitti, Vice Chairman and Managing Director of Pitti Laminations said:
“Pitti Laminations is pleased to report that we started the year on a positive note, continuing the growth momentum built
at the end of the last year. We reported over 30% volume growth driven by the robust domestic business and significantly
improved exports. However, stator frames sales declined sharply due to temporary postponement of orders, impacting the
overall profitability. Based on the current order book, we expect the stator frame sales to improve in the second half of the
fiscal year.
With the improving demand scenario, management has decided to strategically shift some of its manufacturing capacity
to Pune. This move will take us closer to some of our key customers thereby saving on transportation cost and enables us
to service them better in a more time efficient manner. A robust pipeline and our regular interactions with customers gives
us the confidence of delivering strong financial performance during the year.”
Q1 FY2015 vs. Q1 FY2014
Industry Dynamics 5
Index of Industrial Production – Sectoral Index of Industrial Production
Index of Industrial Production – Use Based
Source: Ministry of Statistics and Programme Implementation
2.7%
4.8%
6.3%
(10)%
(5)%
0%
5%
10%
15%
Gro
wth
Rat
e (
%)
Mining Manufacturing Electricity
(1.8%)
2.6%
0.4%
2.7%
(1.2%) (1.3%)
0.1% 1.1%
(2.0%)
(0.5%)
3.4%
4.7%
(3)%
0%
3%
6%
Gro
wth
Rat
e (
%)
Index Of Industrial Production (%)
(6.6%)
15.9%
(2.0%) (6.6%)
2.5% 0.1%
(2.5%)
(3.9%)
(17.6%) (11.6%)
14.3%
4.5%
(20)%
(10)%
0%
10%
20%
Gro
wth
Rat
e (
%)
Capital Goods (%)
Financial Performance Summary 6
Consolidated Financial Highlights
Sales By Geography Volumes By Geography
(Rs. millions)
y-o-y Q4 q-o-q
Particulars FY2015 FY2014 Growth (%) FY2014 Growth (%)
Sales Volume (MT) 4,884 3,739 30.6% 4,279 14.1%
Net Revenue 720 638 12.8% 664 8.4%
EBITDA 70 98 (28.6)% 61 14.3%
Margin (%) 9.7% 15.3% 9.2%
Profit After Tax (PAT) 8 7 20.9% 20 (57.1)%
Margin (%) 1.2% 1.1% 3.0%
Basic EPS (Rs.) 0.62 0.52 20.0% 1.45 (57.1)%
Q1
India 61%
International 39%
Q1 FY2015
India 70%
International 30%
Q1 FY2015
Financial Performance Trend 7
Volume (MT) • Strong volume growth driven by improvement in export and domestic volumes
o Domestic volumes increased by 38.6% y-o-y and 16.4% q-o-q to 3,400 MT
o Export volumes increased by 15.3% y-o-y and 9.3% q-o-q to 1,484 MT
• Stator frames demand declined significantly due to temporary postponement of orders from international clients
Net Revenue (Rs. million) and Q-o-Q Growth (%) • Sales growth was supported by strong growth in volumes
• Domestic sales increased by 32.2% y-o-y and 17.5% q-o-q to Rs. 433 million
• Export sales decreased by 7.5% y-o-y and 4.2% q-o-q to Rs. 280 million
o Impacted by temporary postponement of orders for stator frames
3,739 3,820 3,217
4,279 4,884
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15
638 690
487
664 720
(13.7)% 8.1%
(29.4)% 36.3% 8.4%
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15
Financial Performance Trend 8
EBITDA (Rs. million) and Margin (%)
PAT (Rs. million) and Margin (%)
• Q1 FY2015 EBITDA declined by 28.6% y-o-y
o Primarily due to lower stator frames sales
• EBITDA margin for the quarter was 9.7%
• Based on the current order-book, management expects revival in the stator frames sales in the second half of FY2015
• Q1 FY2015 PAT improved by 20.9% compared to same period last year
o PAT improved due to favorable foreign exchange variations
o Profitability was offset to a certain extent by higher depreciation on account of implementation of the new Companies Act
98
119
51 61
70
15.3% 17.3%
10.4% 9.2%
9.7%
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15
7
12
3
20
8
1.1% 1.8% 0.7%
3.0%
1.2%
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15
Leverage Profile 9
Conservative Leverage Profile
• The Company has a BBB+ rating for its long term bank facilities and A2
rating for its short term bank facilities by CARE
(Rs. million) 30-Jun-2014 31-Mar-2014 30-Jun-2013
Long Term Debt 219 211 140
Short Term Debt 792 941 1,158
Total Debt 1,011 1,152 1,298
Less: Cash & Cash Equivalents 117 95 62
Net Debt / (Net Cash) 894 1,058 1,236
Net Worth 1,120 1,116 1,096
Net Debt / EBITDA (x)1 3.0x 3.2x 3.0x
Total Debt / Net Worth (x) 0.9x 1.0x 1.2x
Note: 1. Based on LTM EBITDA
Product Portfolio 10
Electrical Steel Laminations
• Produces laminations from 50mm to 1,250mm outer diameter
• Spacer/vent and glued laminations for hydro/thermal Generators
• Power generation
• Transportation
• Mining
• Industrial motors
• Locomotives
• Aerospace
• Automobile
• Oil & gas
Die Cast Rotors & Assemblies
• Skew angle rotors upto 540mm OD & 1,000mm height including end rings and fins
• Riveting or bolting the rotor stacks under hydraulic pressure
Stator Core Assemblies
• Assemblies upto a diameter of 2,000mm with circular and segmental laminations and cleating / welding / riveting of assemblies
Rotor Core Assemblies
• Supplies ready to use assembled rotor cores with stacking under hydraulic pressure
Pole Assemblies • Assembled pole bricks with stacking under
hydraulic pressure and welding / core bolting with end castings
Casting & Machine
Components
• Machine shop that can handle range of precision machined components for different applications
• All the above
• Earth moving and mining
Product Description Application / End-market
Blue Chip Customers 11
Laminations Laminations
Casting Laminations
Machining Laminations
Note: Customers arranged in alphabetical order
Global Footprint 12
Geographically Diversified Customer Base
USA
Canada
Mexico
Brazil
Australia
France Germany
Indicates the location of manufacturing facilities Indicates the location of customers
Facilities in Hyderabad Capacity
Plant I 11,000 MT
Plant II 21,000 MT
Machined Casting 3,000 Nos.
Management and Board 13
Key Executives Role
Sharad B Pitti Chairman and MD
Akshay S Pitti Vice Chairman and MD
Y B Sahgal Executive Director
GVSN Kumar Executive Director and CFO
Shruti Agarwal Head, Industrial Relations and Human Resource Development
Board Member Background
Sharad B Pitti Chairman and MD
Akshay S Pitti Vice Chairman and MD
Y B Sahgal Executive Director
GVSN Kumar Executive Director and CFO
N R Ganti Management Consultant
Kanti Kumar R Podar Former President, FICCI
G Narayana Rao Businessman
Arun Garodia Businessman
G Vijaya Kumar Senior Advocate, AP High Court
M Gopala Krishna Retired IAS
TSSN Murthy
Senior Partner, Sankaran & Krishnan (Chartered Accountants)
Management Team Board of Directors
Executive Director Independent Director
Contact Details:
6-3-648/401, Padmaja Landmark, Somajiguda
Hyderabad – 500 082
Phone: +91 40 2331 2770, 2331 2774
Fax: +91 40 2339 3985
www.pittielectriclam.com
GVSN Kumar, Executive Director and CFO Pitti Laminations
[email protected] +91 40 2331 2774
Bijay Sharma Churchgate Partners
[email protected] +91 22 3953 7444